If you are considering retiring to a new state, there are several key factors you need to weigh that can significantly impact your quality of life and financial security.
Taxes often top the list. Some states have no income tax, while others exempt retirement income like Social Security or pensions. Property taxes and sales taxes vary widely too.
The cost of housing, health care and everyday necessities can also differ dramatically among states. A dollar goes much further in some places than others.
The key is to find a place to retire that will be affordable given the size of your nest egg and other sources of income. Recently, the Caring website looked at states from coast to coast to determine which ones financially support retirement the best.
Caring says it analyzed several factors to find which states best support their residents’ retirements, including:
- Average retirement income
- Savings
- Homeownership rates
- Annual cost of a comfortable retirement
On a scale of 1 to 10, Delaware earned the highest mark, at 7.45. Caring says Delaware seniors generally have solid finances that give them “more breathing room in retirement.” For example, seniors in the state who are in their 60s can deduct from income as much as $12,500 in withdrawals from retirement plans such as 401(k) accounts.
Here are the top 10 states on Caring’s list and their retirement scores:
- Delaware: 7.45
- Virginia: 7.2
- Connecticut: 6.53
- Minnesota: 6.48
- Illinois: 6.43
- Iowa: 6.28
- New Hampshire: 6.28
- Michigan: 6.08
- Maryland: 6.02
- New Mexico: 5.97
- Alabama: 5.97
Simply in terms of affordability, West Virginia is where you need the least money to retire comfortably. Seniors need an average of $58,190 a year to retire comfortably there.
At the other extreme is Hawaii, where seniors need $126,296 to retire comfortably — more than twice what is needed in West Virginia.
If you are weighing where to spend your retirement, check out our story “The 10 States Retirees Are Raving About: Could They Be Right for You?“
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